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Monday, 16 April 2018

Office market witnesses record absorption: CBRE

NEW DELHI: Tech corporates led office space take-up during the quarter with a 25% share, while BFSI firms garnered a 24% share. The share of e-commerce firms rose to 15%, thanks to a few large-sized deals by leading global and domestic players. Other sectors that contributed to leasing activity were engineering and manufacturing, research, consulting and analytics and co-working/business centre operators. Pre-commitments continue to be the primary mode of transaction, especially in cities such as Bangalore that had a dearth of quality ready-to-move-in supply.

Anshuman Magazine, Chairman, India and South East Asia, CBRE said, “India’s office market has begun the year on a strong note, dispelling fears of technology and other disruptions impacting the market. With strong economic fundamentals, constantly improving business environment, and the government’s concerted efforts to improve infrastructure in our cities, India’s attractiveness as a preferred market in the region for international and domestic occupiers has only grown.”

Commenting on the findings of the report, Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia Pvt. Ltd. said, “Over the past several quarters, pre-commitments by occupiers in under-construction projects has impacted leasing activity across India’s office market. Constrained supply of ready-tomove-in space, coupled with rising rentals, has led to this trend gaining traction in recent months. The uptick in leasing activity in the first quarter is largely due to several projects getting completed.”

During the quarter, 45% of all the transactions were for smallsized spaces while mid-sized transactions accounted for a 42% share. There were a few largesized deals, most of which were recorded in Bangalore, followed by a few in Mumbai, Delhi-ncr, Chennai and Hyderabad.

CITY HIGHLIGHTS FOR Q1 2018:

Delhi-­ncr

Gurgaon dominated leasing activity in the city

New supply consisted of a few medium-sized non-it developments in Gurgaon and an SEZ development along the Noida Expressway

Leasing activity was primarily driven by the tech sector, followed by corporates from the research, consulting and analytics, and BFSI sectors

Mumbai

Quarterly leasing activity witnessed an uptick in the city

More than half of the leasing activity was in the Secondary Business District (SBD) and the Peripheral Business District (PBD) of Powai and Vikhroli

Demand was largely driven by occupiers from the engineering & manufacturing, and telecommunication sectors, followed by BFSI and co-working firms

Leasing activity was primarily concentrated in EM Bypass and Ruby Connector in SBD and Salt Lake V and Rajarhat in PBD

A strong first quarter is indicative of the sustained growth of India’s office market across key cities. While the share of tech firms in overall demand could drop further as technology disruptions impact headcount growth, the increasing share of other sectors including BFSI, engineering and manufacturing and research and consulting will balance the overall market performance in the long term.

In some cities, this rental growth will be witnessed across all micro-markets, while in others it will be in core locations only.